Regulatory Developments: Dodd-Frank Act Implementation

In this Section:

The Federal Reserve continued to work diligently throughout 2011 to implement the many regulatory changes required under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act or the act) (Pub. L. No. 111-203).

Enacted on July 21, 2010, the Dodd-Frank Act seeks to address critical gaps and weaknesses in the U.S. regulatory framework that were revealed by the financial crisis. The act gives the Federal Reserve important responsibilities to issue rules to enhance financial stability and preserve the safety and soundness of the banking system.

In addition to membership on the Financial Stability Oversight Council (FSOC), the Federal Reserve's new responsibilities include the supervision of savings and loan holding companies (SLHCs) as well as oversight of nonbank financial firms and certain payment, clearing, and settlement utilities that the FSOC designates as systemically important. In consultation with other agencies, the Federal Reserve also is responsible for developing more stringent prudential standards for all large banking organizations and for nonbank firms designated by the FSOC as systemically important.

As of December 31, 2011, the Board had issued seventeen final rules, four public notices, and nine reports required by the act. The Board had also proposed an additional 15 rules for public comment.1 (See box 1 for additional information.)

Box 1. Dodd-Frank Implementation Progresses in 2011

The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) gives the Federal Reserve important responsibilities to enhance financial stability and preserve the safety and soundness of the banking system. In 2011, staff throughout the Federal Reserve System participated in a wide range of rulemakings and other projects designed to implement these new responsibilities. While a sizable number of projects have already been completed, additional work is needed to ensure the Board's obligations under the Dodd-Frank Act are met quickly, carefully, and responsibly.

As of December 31, 2011, the Board had issued seventeen final rules, four public notices, and nine reports required by the act. The Board also has provided assistance to the Financial Stability Oversight Council, facilitated the transition of certain authority from the Office of Thrift Supervision to the Board, helped with the establishment of the Consumer Financial Protection Bureau and the Office of Financial Research, and participated in several joint rulemakings and consultations with other agencies.

The Rulemaking Process

With each regulation, the Board seeks to identify--and, to the extent possible consistent with statutory requirements, minimize--the regulatory burden imposed by the rule. The Board does this in a variety of ways, and at several different stages in the regulatory process. For example, before developing a regulatory proposal, the Board often collects information through surveys and meetings directly from the parties that might be affected by the rulemaking. These efforts help the Board become more informed about the benefits and costs of the proposed rule and enable it to craft a proposal that is both effective and that minimizes regulatory burden.

During the rulemaking process, the Board also specifically seeks comment from the public on the benefits and costs of the proposed approach as well as on a variety of alternative approaches to the proposal.

In adopting the final rule, the Board aims for a regulatory approach that faithfully reflects the statutory provisions and the intent of Congress while minimizing regulatory burden. The Board also provides an analysis of the costs to small organizations of the rulemaking, consistent with the Regulatory Flexibility Act, and computes the anticipated costs of paperwork, consistent with the Paperwork Reduction Act.

Changes to Banking Supervision and Regulation

The Board has issued a variety of final rules to implement the provisions of the Dodd-Frank Act that are designed to promote the safety and soundness of the banking system. Following is a summary of the key regulatory initiatives that were completed during 2011 under the act.

Regulatory Capital

The Dodd-Frank Act establishes floors for regulatory capital requirements applied to domestic bank holding companies (BHCs) and designated nonbank financial companies supervised by the Board. Specifically, section 171 of the act requires the Board to establish minimum risk-based capital and leverage requirements for BHCs that are not less than the "generally applicable" capital requirements for insured depository institutions.

Consistent with this provision, on June 14, 2011, the Board adopted a final rule amending its capital framework to require a banking organization operating under the advanced approaches risk-based capital rules to meet the higher of the minimum requirements under the generally applicable capital requirements and the minimum requirements under the advanced approaches risk-based capital rules.

This rule was promulgated jointly with the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC). In the coming months, the federal banking agencies expect to jointly propose revisions to their regulatory capital rules consistent with changes to international capital standards issued by the Basel Committee on Banking Supervision. The proposed rules would be consistent with the capital requirements established under section 171 of the act.

Resolution Planning

The Dodd-Frank Act requires BHCs with total consolidated assets of $50 billion or more and any nonbank financial company supervised by the Board (collectively, covered companies) to periodically submit to the Board, the FDIC, and the FSOC a plan for such company's rapid and orderly resolution, under the bankruptcy code, in the event of material financial distress or failure. These resolution plans, or "living wills," will assist covered companies and regulators in conducting advance resolution planning for a covered company.

On October 17, 2011, the Board and the FDIC issued a final rule requiring covered companies to annually submit resolution plans. Large, complex covered companies are required to submit a resolution plan that covers the entire organization. Smaller, less complex companies can file a streamlined resolution plan.

The Board's resolution plan rule is codified as Regulation QQ (12 CFR part 243). A company's resolution plan must describe the company's strategy for rapid and orderly resolution in bankruptcy during a time of financial distress or failure of the company, and the plan must include information concerning the company's operations and funding.

Under Regulation QQ, a company's resolution plan must also include information regarding the manner and extent to which any insured depository institution affiliated with the company is adequately protected from risks arising from the activities of nonbank subsidiaries of the company; detailed descriptions of the ownership structure, assets, liabilities, and contractual obligations of the company; identification of the cross-guarantees tied to different securities; and a description of the governance and oversight process related to resolution planning.

The act also instructed the Board to conduct two studies in consultation with the Administrative Office of the U.S. Courts regarding the resolution of financial companies: one regarding the resolution of domestic financial companies under the Bankruptcy Code, and one regarding international coordination relating to the resolution of systemic financial companies under the Bankruptcy Code and applicable foreign laws. The Board issued both studies in July 2011.2

Supervision of SLHCs

The act transferred all supervisory and regulatory authority over SLHCs from the Office of Thrift Supervision (OTS) to the Board, effective July 21, 2011 (the transfer date). It also grants the Board the authority to examine, obtain reports from, and establish consolidated capital standards for SLHCs.

The Board undertook several initiatives to provide SLHCs with advance notice of how the Board would supervise and regulate SLHCs after the transfer date.

The Board, OTS, OCC, and FDIC issued a joint report on January 25, 2011, regarding the agencies' plans to implement the transfer of OTS authorities on January 25, 2011.

The Board issued a public notice on February 3, 2011, of its intention to require SLHCs to submit the same regulatory reports as BHCs.3

The Board issued a public notice on April 15, 2011, that described how the Board would apply certain parts of its consolidated supervisory program for BHCs to SLHCs after the transfer date. On the transfer date, the Board issued a public notice of all the OTS regulations that the Board would continue to enforce.

The Board issued an interim final rule on August 12, 2011, establishing regulations for SLHCs. New Regulation LL, governing SLHCs generally, and new Regulation MM, governing SLHCs in mutual form, transfer from the OTS to the Board the regulations necessary for the Board to administer the statutes governing SLHCs.

Debit Interchange

Section 1075 of the act restricts the interchange fees that debit card issuers may receive for electronic debit card transactions. Specifically, under the act, the interchange fee an issuer receives for a particular transaction must be reasonable and proportional to the cost incurred by the issuer with respect to the transaction. The act requires the Board to set standards for determining whether an interchange fee is reasonable and proportional to the issuer's cost and permits the Board to adjust the interchange fee to account for an issuer's fraud-prevention costs. In addition, it requires the Board to prescribe rules prohibiting network exclusivity arrangements and routing restrictions in connection with electronic debit card transactions.

On June 29, 2011, the Board issued a final rule to establish standards for debit card interchange fees. Under the final rule, the maximum permissible interchange fee that an issuer may receive for an electronic debit transaction is the sum of 21 cents per transaction and 5 basis points multiplied by the value of the transaction. This provision regarding debit card interchange fees became effective on October 1, 2011. Also on June 29, the Board issued an interim final rule that allows for an upward adjustment of no more than one cent to an issuer's debit card interchange fee, provided the issuer satisfies the fraud-prevention standards set forth in the interim final rule. The interim final rule became effective on October 1, 2011.

In accordance with the statute, the final rule exempts issuers that, together with their affiliates, have assets of less than $10 billion from the debit card interchange fee standards. To facilitate implementation of the small issuer exemption, the Board has published lists of institutions with consolidated assets above and below the $10 billion exemption threshold and plans to survey networks and publish annually the average interchange fees each network provides to its exempt and nonexempt issuers.

In addition, the rule prohibits all issuers and networks from restricting the number of networks over which electronic debit transactions may be processed to less than two unaffiliated networks. The rule also prohibits issuers and networks from inhibiting a merchant's ability to direct the routing of the electronic debit transaction over any network that the issuer has enabled to process them.

The Board also has issued several reports regarding interchange fees, as required by the act. On June 29, 2011, the Board issued a report disclosing certain aggregate and summary information concerning transaction processing costs and interchange transaction fees charged or received in connection with electronic debit transactions.4 On July 21, 2011, the Board issued a report on the use of prepaid cards by government-administered payment programs as well as the interchange and cardholder fees charged with respect to such prepaid cards.5

Interest on Demand Deposits

Section 627 of the act repealed the provision of the Federal Reserve Act that prohibited member banks from paying interest on demand deposits. This prohibition had been implemented through the Board's Regulation Q. On July 14, 2011, the Board issued a final rule repealing Regulation Q and thereby allowing member banks to pay interest on demand deposits.

Key Regulatory Initiatives Still in Development

A number of important regulatory developments remain in the proposal stage. Following is a summary of additional regulatory initiatives that the Board proposed in 2011.

Enhanced Prudential Standards for Financial Firms

The act requires the Board to establish heightened prudential standards for covered companies.6 The heightened standards must be more stringent than the standards that apply to other nonbank financial companies and BHCs that do not pose similar risks to the financial system.

On December 20, 2011, the Board proposed enhanced prudential standards related to capital, limits on credit exposure to single counterparties, liquidity, stress testing, and risk management. The enhanced prudential standards are intended to strengthen the financial resilience of covered companies and limit the exposure of such companies to individual counterparties. The proposed standards generally apply to covered companies other than covered companies that are foreign banking organizations (U.S. covered companies). The Board expects to issue a separate proposal that would apply the enhanced prudential standards to foreign banking organizations (FBOs).

The proposed standards would subject U.S. covered companies to the Board's capital plan rule, which the Board approved on November 22, 2011. Under the capital plan rule, the Federal Reserve annually would evaluate institutions' capital adequacy; their internal capital adequacy assessment processes; and their plans to make capital distributions, such as dividend payments or stock repurchases. The Federal Reserve would not object to proposed dividend increases or other capital distributions only if companies are able to demonstrate sufficient financial strength to operate as successful financial intermediaries under stressed macroeconomic and financial market scenarios, even after making the desired capital distributions.

The enhanced prudential standards would also apply a net limit for credit exposure of a U.S. covered company to any single counterparty as a percentage of the company's regulatory capital. In addition, the standards would set a two-tier single-counterparty credit limit, with a more stringent credit limit applied to credit exposures between the largest U.S. covered companies and large counterparties.

Further, the proposed standards would establish a general limit that prohibits a U.S. covered company from having aggregate net credit exposures to any single unaffiliated counterparty in excess of 25 percent of the enhanced standard company's capital stock and surplus. The proposal also would set a more stringent 10 percent aggregate net credit exposure limit between nonbank covered companies and BHCs with total consolidated assets of $500 billion or more (collectively, "major covered companies") on the one hand, and counterparties that are major covered companies or FBOs with total consolidated assets of $500 billion or more on the other hand.

Also under the proposed standards, U.S. covered companies would be required to comply with qualitative liquidity risk-management standards generally based on interagency liquidity risk-management guidance. Specifically, the proposal would require U.S. covered companies to conduct internal liquidity stress tests and set internal quantitative limits to manage liquidity risk.

In addition, the Board would conduct annual stress tests of U.S. covered companies using three economic and financial market scenarios and publish a summary of the results, including company-specific information. The proposed standards also would require U.S. covered companies and state member banks, BHCs, and--subject to a delayed effective date--SLHCs with assets above $10 billion to conduct one or more company-run stress tests each year and make a summary of the results public.

Moreover, the standards would require U.S. covered companies and publicly traded BHCs with total consolidated assets of $10 billion or more to establish risk committees of their boards of directors and to institute enterprise-wide risk-management programs that would be overseen by the risk committees. The proposal also would require that each U.S. covered company retain a chief risk officer, and maintain its risk committee as a separately chartered committee of the board of directors.

Finally, the proposed standards would establish early remediation triggers--such as capital levels, stress test results, and risk-management weaknesses--so that financial weaknesses are addressed by U.S. covered companies at an early stage.

Prohibitions against Proprietary Trading and Other Activities

Section 619 of the Dodd-Frank Act generally prohibits banking entities from engaging in short-term proprietary trading for a banking entity's own account, subject to certain exemptions. That section also prohibits a banking entity from owning, sponsoring, or having certain relationships with a hedge fund or private equity fund, subject to certain exemptions. These prohibitions are commonly known as the "Volcker rule." The prohibitions and restrictions contained in the Volcker rule apply to all insured depository institutions; BHCs; SLHCs; companies that control an industrial loan company; foreign banks with a branch, agency, or subsidiary bank in the United States; and affiliates and subsidiaries of these entities.

The Board, OCC, FDIC, Commodity Futures Trading Commission (CFTC), and Securities and Exchange Commission (SEC) are responsible for developing and adopting regulations to implement the prohibitions and restrictions of the Volcker rule. On October 11, 2011, the Board requested comment on a proposed rule, developed jointly with the other agencies, to implement the Volcker rule. The proposal would implement the Volcker rule's prohibitions and, consistent with statutory authority, would provide certain key statutory exemptions, including market making, underwriting, and risk-mitigating hedging. On December 23, 2011, the Board, FDIC, OCC, and SEC extended the comment period on the proposal to implement the Volcker rule through February 13, 2012.

The Board alone is responsible for adopting rules to implement the conformance period provisions of the Volcker rule. On February 9, 2011, the Board issued a final rule to give banking entities a period of time to conform their activities and investments to the prohibitions and restrictions of the Volcker rule. The final rule includes a general two-year conformance period, and it allows the Board to extend, by rule or order, this two-year period by up to three one-year periods. In addition, the final rule implements a special five-year extended transition period available for certain qualifying investments in hedge funds and certain private equity funds. The conformance period is intended to give markets and firms an opportunity to adjust to the Volcker rule.

Regulation of Derivative Markets

The act makes a number of significant changes to the regulation of derivatives, which it refers to as "swaps" and "security-based swaps," as well as to the regulation of participants in the derivatives markets.

In general, the act requires (1) all standardized derivatives to be centrally cleared and traded on an exchange or registered execution facility; (2) all derivatives to be reported to registered data repositories; (3) all derivatives dealers ("swap dealers") and major market participants ("major swap participants") to register with the SEC and/or the CFTC; and (4) the establishment of new, regulated organizations to support the derivatives market, including exchanges, clearing organizations, and data repositories. In addition, the act amends sections 23A and 23B of the Federal Reserve Act by, among other things, expanding the definition of "covered transaction" to include credit exposure of a bank or its subsidiaries to an affiliate resulting from a derivative transaction.

The amount of margin that would be required under the proposed rule would vary based on the relative risk of the counterparty and of the swap or security-based swap. A swap entity would not be required to collect margin from a commercial end user as long as its margin exposure is below an appropriate credit exposure limit established by the swap entity.

On July 28, 2011, the Board issued a proposed rule that would set standards for banking organizations regulated by the Federal Reserve that engage in certain types of foreign exchange transactions with retail customers. The proposal outlines requirements for disclosure, recordkeeping, business conduct, and documentation for retail foreign exchange transactions. Institutions engaging in such transactions would be required to identify themselves to their regulator and to be well capitalized. They would also be required to collect margin for retail foreign exchange transactions.

Removal of References to Credit Ratings from Capital Guidelines

Section 939A of the act requires all federal agencies to review their regulations within one year after passage of the act to identify any reference to or requirements regarding credit ratings, and issue a report to Congress upon conclusion of the review. The Board completed the required review of its regulations and issued a report to Congress on July 25, 2011.7

Section 939A also requires the agencies to remove any reference to, or requirements of reliance on, credit ratings in regulations that require the use of an assessment of creditworthiness of a security or money-market instrument. On August 10, 2010, the Board, FDIC, and OCC issued an advanced notice of proposed rulemaking regarding alternatives to the use of credit ratings in their risk-based capital rules. The Board, with the FDIC and OCC, also held a roundtable discussion with industry, academic, and other participants in November 2010 to hear views on how to develop alternatives to credit ratings. The staffs of the agencies considered comments received on the advanced notice of proposed rulemaking as well as at the roundtable discussion as they worked to develop alternatives.

On December 7, 2011, the Board, FDIC, and OCC issued a second notice of proposed rulemaking that would modify the agencies' market risk capital rules for banking organizations with significant trading activities. The modified notice of proposed rulemaking included alternative standards of creditworthiness that would be used in place of credit ratings to determine the capital requirements for certain debt and securitization positions covered by the market risk capital rules. The Board anticipates that it will propose additional amendments to remove references to credit ratings from its regulations in the near future.

Credit-Risk Retention

Section 941(b) of the act imposes certain credit-risk retention obligations on securitizers or originators of assets securitized through the issuance of asset-backed securities (ABS). On March 29, 2011, the Board issued a joint proposed rule with five other federal agencies that would require securitizers to retain risk through one of several options, which were designed to take into account market practices and securitization structures across different asset classes. Under the proposed rule, sponsors of ABS would be required to retain at least 5 percent of the credit risk of the assets underlying the securities.

As required by the act, the proposed rule includes a variety of exemptions from the requirement that sponsors of ABS retain credit risk of the assets underlying the securities, including an exemption for U.S. government-guaranteed ABS and for mortgage-backed securities that are collateralized exclusively by residential mortgages that qualify as qualified residential mortgages (QRMs). In addition, the proposal would establish a definition for QRMs--incorporating such criteria as borrower credit history, payment terms, down payment for purchased mortgages, and loan-to-value ratio--designed to ensure they are of very high credit quality.

Ultimately, the proposed rule aims to ensure that the amount of credit risk retained by sponsors is meaningful, while taking into account market practices and reducing the potential for the rule to affect negatively the availability and cost of credit to consumers and businesses.

The agencies received more than 13,000 comments (including more than 300 non-form substantive comments) on the proposed rule. The staffs of the rulemaking agencies have been meeting regularly to discuss the comments and options for moving forward on the rulemaking.

Payment, Settlement, and Clearing Activities and Utilities

The act gives the FSOC the authority to identify and designate as systemically important a financial market utility (FMU) if the FSOC determines that failure of or a disruption to the FMU could create or increase the risk of significant liquidity or credit problems spreading among financial institutions or markets and thereby threaten the stability of the U.S. financial system.

On July 18, 2011, the FSOC issued a final rule describing the criteria that will inform its processes and procedures for designating an FMU as systemically important. Under the rule, which incorporates the act's criteria, the FSOC will consider the aggregate monetary value of transactions processed by an FMU; the aggregate exposure of an FMU to its counterparties; the relationship, interdependencies, or other interactions of an FMU with other FMUs; and the effect that the failure of or disruption to an FMU would have on critical markets, financial institutions, or the broader financial system. The FSOC also will perform a more in-depth review and analysis of specific FMUs from both a quantitative and qualitative perspective before making a designation.

In addition, the act authorizes the Board to prescribe risk-management standards governing the operations of designated FMUs (except for designated FMUs that are registered with the CFTC as derivative clearing organizations or registered with the SEC as clearing agencies). On March 30, 2011, the Board proposed a rule establishing risk-management standards governing the operations related to payment, clearing, and settlement activities of designated FMUs that are not registered with the CFTC or SEC. The proposed risk-management standards are based on the existing international standards that the Board has incorporated previously into its Policy on Payment System Risk. The proposed rule would also establish requirements and procedures for advance notice of material changes to the rules, procedures, or operations of a designated FMU for which the Board is the primary supervisor.

In addition, as required by the act, in July 2011 the Board, CFTC, and SEC issued a joint report to Congress containing recommendations for promoting robust risk-management standards and consistency in the supervisory programs of the CFTC and SEC for designated clearing entities.8

On April 14, 2011, the Board and other federal regulators requested comment on a proposal to implement the act's prohibition on incentive-based compensation arrangements. The proposal is significantly similar to the interagency guidance published in June 2010 on which the Federal Reserve led development. In particular, the proposal requires that incentive compensation practices at covered financial institutions be consistent with three key principles: (1) they should appropriately balance risk and financial rewards, (2) they should be compatible with effective controls and risk management, and (3) they should be supported by strong corporate governance.

Further, the agencies proposed that covered financial institutions with at least $1 billion in assets be required to have policies and procedures to ensure compliance with the requirements of the rule, and submit an annual report to their federal regulator describing the structure of their incentive compensation arrangements. The agencies also proposed that larger covered financial institutions--generally those with $50 billion or more in assets--defer at least 50 percent of the incentive compensation of certain executive officers for at least three years, and that the amounts ultimately paid reflect losses or other aspects of performance over time. The Board and other agencies are in the process of addressing public comments on the proposal.

Registration of Securities Holding Companies (SHCs)

The Dodd-Frank Act eliminated the SHC supervision framework pursuant to which the SEC supervised SHCs. In its place, the act permits an SHC to elect to register with and be supervised by the Board in order to satisfy the requirements of a foreign regulator or a provision of foreign law that the company be subject to comprehensive, consolidated supervision. On September 2, 2011, the Board invited public comment on a proposed rule outlining the registration requirements and procedures for SHCs.

Consumer Financial Protection

The Dodd-Frank Act made many enhancements to consumer financial protection, and the Board began implementing several of these enhancements prior to the transfer of rulemaking authority for most federal consumer protection statutes to the Consumer Financial Protection Bureau (CFPB) on July 21, 2011. For instance, the act amends the Truth in Lending Act (TILA) and Consumer Leasing Act (CLA) to extend the protections of those laws to consumer credit transactions and consumer leases of higher dollar amounts. Before the Dodd-Frank Act, TILA and CLA applied to consumer credit transactions and consumer leases, respectively, of $25,000 or less. The Dodd-Frank Act increased this limit to $50,000 for each statute. On March 25, 2011, the Board issued a final rule amending Regulation Z (Truth in Lending) and Regulation M (Consumer Leasing) to reflect these higher thresholds.

The Dodd-Frank Act further amends TILA with respect to home mortgage lending. On February 23, 2011, the Board issued a final rule to increase the annual percentage rate threshold used to determine whether a mortgage lender is required to establish an escrow account for property taxes and insurance for first-lien jumbo mortgages. Also on February 23, the Board proposed a rule that would expand the minimum period for mandatory escrow accounts for first-lien, higher-priced mortgage loans from one to five years, and longer under certain circumstances. The proposed rule would provide an exemption from the escrow requirement for certain creditors that operate in rural or underserved communities. It also contains new disclosure requirements mandated by the Dodd-Frank Act. The proposed rule was transferred to the CFPB on the transfer date.

In addition, the Dodd-Frank Act generally prohibits lenders from making residential mortgage loans unless the consumer has a reasonable ability to repay the loan. On April 19, 2011, the Board proposed a rule to implement this provision. Under the Board's proposal, a lender could comply with the ability-to-repay requirement by considering and verifying specified underwriting factors, making certain types of qualified mortgages, or refinancing a non-standard mortgage into a more stable standard mortgage. The proposed rule also would implement the Dodd-Frank Act's limits on prepayment penalties. This proposed rule also was transferred to the CFPB on the transfer date.

Further, the Dodd-Frank Act amends the Fair Credit Reporting Act to require a creditor to disclose credit scores and related information to a consumer when the creditor uses the consumer's credit score in setting material terms of credit or in taking adverse action. On July 6, 2011, the Board and the Federal Trade Commission issued final rules to implement this provision. The final rules revise the content requirements for risk-based pricing notices and add related model forms that reflect the new credit score disclosure requirements. The final rules were transferred to the CFPB on the transfer date.

On May 12, 2011, the Board issued a proposed rule to create protections for consumers who send remittance transfers to recipients located in a foreign country. Consistent with section 1073 of the Dodd-Frank Act, the Board proposed to amend Regulation E to require disclosure of information about fees, exchange rates, and amount of currency to be received by the recipient of a remittance transfer. The proposed rule, which was transferred to the CFPB on the transfer date, would also provide error resolution and cancellation rights for senders of remittance transfers. In addition, on July 19, 2011, the Board issued a report to Congress on the status of automated clearinghouse expansion for remittance transfers to foreign countries.9

The Board of Governors and the Government Performance and Results Act

In this Section:

Overview

The Government Performance and Results Act (GPRA) of 1993 requires that federal agencies, in consultation with Congress and outside stakeholders, prepare a strategic plan covering a multiyear period and an annual performance plan. The GPRA Modernization Act of 2010 refines those requirements to include quarterly performance reporting. Although the Federal Reserve is not covered by the GPRA, the Board of Governors voluntarily complies with the spirit of the act.

Strategic Plan, Performance Plan, and Performance Report

The Board's strategic plan articulates the Board's mission, sets forth major goals, outlines strategies for achieving those goals, and discusses the environment and other factors that could affect their achievement. It also addresses issues that cross agency jurisdictional lines, identifies key quantitative measures of performance, and discusses the evaluation of performance. The Board is currently revising its 2012-15 Strategic Plan, with Board approval anticipated in 2012.

The performance plan includes specific targets for some of the performance measures identified in the strategic plan and describes the operational processes and resources needed to meet those targets. It also discusses validation of data and verification of results. The performance report discusses the Board's performance in relation to its goals.

3. On December 23, 2011, the Board issued a final notice permitting a two-year phase-in period for most SLHCs to file Federal Reserve regulatory reports and an exemption for some SLHCs from initially filing such reports. Return to text